I have an opportunity to buy a tiny lot in a gentrifying neighborhood. The maximum density is 30 dwelling units per net acre.
I've never done this before.... But I waited 10 years to get started w/my current investment so I do better just jumping in feet first.
I have one buy & hold property currently and one primary residence both in NorCal. I want to develop this lot into a live/work work apartment w/Retail on the ground. Anyone have any experience with this and could offer anything that I should expect. Or if anyone has any ideas or cool concepts they've run across. Thanks in advance.
I sure do hope someone answers your post.
I am considering doing the same thing.
I like your idea! I'm only curious if you are ready for it. Is this your first real estate deal? Have you ever developed anything before? I have not, but from what I have studied it takes quite a while and deep pockets (or a partner with deep pockets). I think your best bet may be to find a developer that is like minded and partner with them. Typically land value is around 20% of the value of property once finished, maybe you could bring the land to the table for a share of the proceeds.
Good, I'm not alone :)
Thanks, but this won't be attractive enough for a partner. This will probably have to be my 'proof of concept'.
@RandolphKallenberg not sure what area you are in but I'd love to know if you put wheels in motion at some point.
I'll keep you posted.
@Jay Sandefur Jr The process starts with meeting with the city to find out if you can do what you want to do. What your footprint is going look like based on setbacks, parking stormwater. etc.
You also need to ask about the entire process from site plan submission to final planning approval. How much for permits and how long.
You also need to speak with the utility companies to find out about electric, water, sewer, gas etc.
Once you determine your project is feasible from a zoning standpoint you then want to talk to some general contractors that build the type of product you are looking to build to get an idea of what the cost will run. They should be able to give you a ballpark of the size building you’re looking to build and what the average costs are.
Once you have that information you can then talk to some lenders to make sure you are qualified and can get the financing.
Assuming everything comes together and you are confident you can get the financing you then need to contract with a civil engineer and architect and or design build contractor to start the design and entitlement process.
There is a whole lot more to it but this is just a basic overview to go off of to get started.
A lot of cities' zoning codes have been updated in recent years to permit residential in retail/office zones, which is great because most places have too much retail/office and not enough apartments. I've been keeping an eye out for smaller sites at the edges of secondary business districts where live/work might make sense.
How tiny of a lot? One concern is that parking requirements, not the headline density limit, may ultimately be what limits your project's scope.
I've recommended this elsewhere, but page 20 of this book has a clever design for a 4-unit + live/work, whose construction can be financed with a single-close conforming residential mortgage. http://www.cneinc.org/missingmiddle
Note that there's residential on the back of the ground floor; some zoning codes don't like this, but without it you'll have to build an elevator, which raises costs substantially.
@Jay Sandefur Jr If you find an architect in the area that works with small developers you can often get them to put together a feasibility study for the site for a small fee. The more info you can give them about budget / project scope, and any other additional goals the more effective they will be. Make sure you are clear about what your goals are and what your exit strategy is going to be for the project.
If the lot is really small (and with that density limit) you may be looking at a single family home only but some jurisdictions have begun to allow for ADU's or DADU's (accessory dwelling unit, detached accessory dwelling unit) which could allow for someone to have a small apartment on a single family lot spreading out their mortgage costs and / or allowing you or them to condo it out and sell separately. This is all specific to the jurisdiction and your architect will be able to tell you what can be done.
Good luck! Keep us updated.
Awesome thanks guys @David_Edwards, I was thinking the same thing as an alternative to retail regarding the ADU.
I actually already own a storage container tiny house that has not been put to use. (I rented one of these out myself once before - 170 sq feet in a backyard for $540/month in 2010...NorCal for ya). I'll report back to the group